Price comparison websites came under fire from the regulator today after a report revealed some are failing to provide their customers with a true picture of the products they’re buying.

Many sites focus on the headline price and brand of insurance products, rather than clearly explaining key features, the Financial Conduct Authority warned.

A lack of understanding about different policy options could lead households to make the wrong decisions when buying insurance, leaving them vulnerable to costly pay outs further down the line or even being uninsured.

Warning: The FCA advised consumers to weigh up insurance policies carefully and not assume the're the same

The regulator called on the comparison website industry to take action to clear up their websites and urged consumers to be aware that not all insurance products are the same and not simply to buy the cheapest product.

As many as one in three motor policies taken out last year were sold through price comparison websites – amounting to around 26.6million motorists.

However millions may not be receiving the right information to make the best decisions, because the level of clarity on websites ‘varied significantly’, the FCA warned.

It added that some sites are part of a larger insurance group or broker, but do not disclose potential conflicts of interest, which is against the rules.

The FCA reviewed 14 websites between December and April, but did not identify which they were.

Clive Adamson, FCA director of supervision said that price comparison websites ‘provide an important service for millions of consumers bringing convenience and simplicity to buying financial products online.

'However, our review found that they were not meeting our requirements in delivering fair and consistent outcomes for consumers. We also found, through our consumer research, that consumers had a number of misconceptions about the services they provided.

'We expect price comparison websites to take on board the findings of the review. It is also important for consumers to understand that not all products are the same and the cheapest product may not always be the best for their needs.'

Some websites made it very difficult to compare different policies, For example instead of providing information on terms and conditions, some websites would instead tell users to ‘check with insurer’ or ‘check the policy’.

In consumer research, some people appeared to be confused by the perceived authority of the price comparison website, thinking that the website and insurance provider ‘must know better’.

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For example, when they saw pre-populated excess amounts, some users would automatically assume these were the right levels for them, whether or not they were.

Similarly when they ran a search for a type of product on a comparison website, some consumers would assume that what they requested did not exist if no results showed up.

Some price comparison websites used ‘green ticks’ and ‘red crosses’ to indicate whether a particular feature or cover was included or not included – such as watersports or skiing in the case of travel insurance.

However the FCA probe found that in some cases features with green ticks were not included in the core policy after all. If the consumer clicked on a ‘more info’ button, they found there was an additional cost attached, or in some cases the cover was not included in the policy at all.

The watchdog also said it was not always clear to the consumer that most price comparison groups are paid fees by insurers for products sold through their websites.

The FCA survey builds on a 2011 report by the watchdog's predecessor, the Financial Services Authority, where it first warned these websites about misleading product information and their relationships with insurers.

The British Insurance Brokers' Association's chief executive, Steve White, said: 'We are pleased that the FCA has reviewed this important area and we are not surprised by the findings. We now want to see the FCA drive home the recommendations that it made in 2011 and ensure that these are complied with.'

Gocompare founder and chief executive Hayley Parsons said: 'Gocompare.com fully supports measures to promote best practice in the price comparison website industry. Although we regularly update our services to reflect our customers' evolving needs, we will be reviewing the findings of the FCA's report.'

'Gocompare.com has always strived to show its customers the full story when it comes to insurance comparison, and was the first comparison site to enable its customers to compare the levels of cover, as well as price.'

Rival Moneysupermarket said it was spending £14 million this year on new technology to make it easier for customers to compare policies on features other than price.

Moneysupermarket chief executive Peter Plumb said: 'It is fundamental that any policy purchased through us is appropriate for an individual's personal circumstances and we have found that nearly half of our customers do not buy a policy based on price alone - despite that being the main driver to use price comparison sites - instead basing their decision on other features such as additional cover, excess amount or brand.'